Nortel/Lehman: A Balancing Act

The Supreme Court handed down its decision yesterday on the combined appeals of Nortel GmbH (In Administration) ("Nortel") and Lehman Brothers International (Europe) (In Administration) ("Lehman Brothers") (together, the "Appellants") against the Pensions Regulator ("tPR"). The Appellants asked the Supreme Court to reverse the decision of the Court of Appeal from October 2011, which held that the costs of complying with a financial support direction ("FSD") or contribution notice ("CN") issued by tPR were payable as an expense of administration.

Much to the relief of employers, creditors, lenders, and insolvency practitioners, the Supreme Court has found in favour of the Appellants holding that a company's liability arising pursuant to an FSD issued after the company has gone into administration, ranks as a provable debt of the company, and not as an expense of the administration.